Sunday, February 23, 2020

Sunday Night Futures

by Calculated Risk on 2/23/2020 07:03:00 PM

Note: Most analysts are forecasting that the novel coronavirus will be contained sometime in Q2 (perhaps on the assumption that the virus is seasonal like SARS or the flu). However there are significant downside risks to this view.  The CDC has expanded travel advisories to include South Korea, Japan and Hong Kong - and Italy is having a significant outbreak.

From Goldman Sachs tonight:

Despite a negligible hit to aggregate US activity from supply chain production disruptions under our baseline scenario, we have nevertheless increased our estimated growth drag from the coronavirus given the slower than expected pickup in Chinese activity and travel. We now estimate a 0.8pp growth drag in Q1 (from 0.5-0.6pp previously), with positive growth effects of about 0.3pp in Q2, 0.3-0.4pp in Q3, and 0.1pp in Q4 as activity normalizes. While this would imply a modest hit to annual-average GDP growth of 0.1pp, the risks are clearly skewed to the downside until the outbreak is contained. Based on our estimates, we have taken down our Q1 annualized GDP growth forecast by 0.2pp to 1.2%.
Weekend:
Schedule for Week of February 23, 2020

Monday:
• At 8:30 AM ET, Chicago Fed National Activity Index for January. This is a composite index of other data.

• At 10:30 AM, Dallas Fed Survey of Manufacturing Activity for February.

From CNBC: Pre-Market Data and Bloomberg futures: S&P 500 are down 38 and DOW futures are down 318 (fair value).

Oil prices were down over the last week with WTI futures at $52.11 per barrel and Brent at $56.95 barrel.  A year ago, WTI was at $54, and Brent was at $66 - so oil prices are down year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.47 per gallon. A year ago prices were at $2.47 per gallon, so gasoline prices are unchanged year-over-year.